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HMRC caught napping again?

HMRC caught napping again?

HMRC is in hot water yet again; this time over data showing that over 9 million National Insurance contributions dating back as far as 2004–05 have not been added to employees’ records.

The total monetary value of these unmatched contributions is in excess of £1.2 billion.

Ian Liddell-Grainger, the MP who chairs the All Party Parliamentary Group on Taxation, warned taxpayers that their pensions might be affected if HMRC does not resolve this backlog.

The problem stems from mistakes on the P14 forms that employers submit to HMRC every May. These forms log the NI and PAYE contributions for individual employees. If the Revenue finds an error, it is supposed to contact the employer in order to obtain the correct information. However, it appears that administrative corners were cut and this did not happen.

The MP said that taxpayers with unmatched NICs may need to find their old payslips or ask their employer to verify the contributions paid.

In order to qualify for a full state pension, individuals have to have paid contributions for a minimum of 30 years.

Employers have reacted angrily to suggestions that they are to blame for this situation. Phil McCabe from the FPB pointed out that HMRC has a track record of poor levels of efficiency and administration and the tax system needs simplification.

HMRC has fought back at the media coverage by posting a notice on its website saying that the department has not lost the contributions. Unmatched contributions are placed in a suspense account until they can be correctly allocated.

A spokesman for the Revenue explained that they write to individuals if they see a gap in contributions and respond to the situation immediately if someone reports a gap. It is simply not true that millions of people will lose their correct pension entitlement.

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Image: Brotin by Sara Björk

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